Mr. Kaplan weighed in as the U.S. continues to be roiled by protests in the wake of the police killing of George Floyd.
Photo: Christopher Goodney/Bloomberg NewsFederal Reserve Bank of Dallas President Robert Kaplan said Sunday that systemic racism has held the U.S. economy back from reaching its full potential.
“A more inclusive economy where everyone has opportunity will mean faster workforce growth, faster productivity growth, and we’ll grow faster,” Mr. Kaplan said in the transcript of an appearance on CBS’s “Face the Nation” news program. When it comes to addressing the headwind racism presents to growth, “we’re right to focus on this and bore in on this,” Mr. Kaplan said, adding “it is in the interests of the U.S.” to bring about a more equitable economic future for all races.
Mr. Kaplan, who is a voting member of the rate-setting Federal Open Market Committee, weighed in as the U.S. continues to be roiled by protests in the wake of the police killing of George Floyd, an African-American, last month. Protesters are calling for an end to police brutality and for the nation to address what they see as a system that deliberately holds back nonwhites.
Federal Reserve officials have over recent days offered comments that indicate they agree with at least some of that critique. Speaking to reporters Wednesday, Fed Chairman Jerome Powell said “everyone deserves the opportunity to participate fully in our society and in our economy,” in comments that decried the existence of racism.
Meanwhile, Atlanta Fed leader Raphael Bostic said in an essay published Friday that “systemic racism is a yoke that drags on the American economy.”
He also said that after watching protests against police brutality, “I have shared in the outrage of the truly horrific events that brought us to this point,” Mr. Bostic wrote. “These events are yet another reminder that many of our fellow citizens endure the burden of unjust, exploitative, and abusive treatment by institutions in this country.”
Mr. Bostic, who became president of the Atlanta Fed in 2017, is the first-ever African-American leader of a regional Fed bank in the institution’s centurylong history.
In his television appearance, Mr. Kaplan said that government-spending programs remain critical as the nation navigates the coronavirus pandemic, while adding that “monetary policy has a key role to play and we’re doing everything we can.”
Mr. Kaplan said it is going to take quite a while for employment to recover from its historic decline. The May unemployment rate stood at 13.3%, compared with 3.6% in January. He said he believes unemployment is already falling but in real-world measurements it is probably still in the midteen percentages. The Fed’s forecast, while beset by high levels of uncertainty, currently projects year-end unemployment of just over 9%.
“We’re going to get positive job growth in June, July and from here,” Mr. Kaplan said. But, “depending on how fast the service sector comes back and people re-engage, we’re still going to have an elevated level of unemployment maybe as high, based on my forecast, of 8% or more,” he said.
That means there will still be a role for enhanced unemployment insurance, Mr. Kaplan said, although he could see the terms of that support changed to help create incentives for people to go back to work. Right now, enhanced jobless benefits are set to expire at the end of July, at a point when few believe the pandemic’s impact will have abated.
Write to Michael S. Derby at michael.derby@wsj.com
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